WTI: Bulls taking back charge on 54 handle amid tightening global supplies

• Supported by tighter US supplies and supply risks from Venezuelan sanctions.
• All eyes on the US-China trade talks and risk trends for fresh impetus.  

WTI (oil futures on NYMEX) stalled its overnight corrective slide just ahead of the 54 handle and caught a fresh bid wave in early Asia, as the bulls look to retest the ten-week tops at 54.92 heading into the US-China trade talks and US EIA fuel stocks data.

The corrective move lower in the black gold can be seen mainly as a profit-taking slide, as markets sought to lock-in gains after the bulls ran into the key $ 55 psychological level.

The recent bullish momentum in the barrel of WTI gained traction after the US Energy Information Administration (EIA) weekly crude inventories report showed a smaller-than-expected rise in the US crude stockpiles. The EIA data showed that the US Crude inventories rose by 919,000 barrels when compared with analysts’ expectations in a Reuters poll for an increase of 3.2 million barrels.

Meanwhile, a broadly weaker US dollar and increased supply disruption risks amid the US’ exports sanctions on Venezuela, limiting transactions between the US companies and Venezuelan state-owned oil firm PDVSA, remain the main driver behind the recent gains in oil prices.

However, it remains to be seen if the commodity can scale the 55 barrier amid looming concerns over the global growth and US-China trade talks. The immediate focus now remains on the Chinese manufacturing sector activity data for January for near-term trading opportunities. Note that China is the world’s second biggest oil consumer.

WTI Technical Levels